Centrica first-half profit falls
LONDON (Reuters) - Utility Centrica Plc (CNA.L) reported a lower first-half profit as higher natural gas prices and a dip in power demand due to the warmer spring and summer weather took a toll on its residential energy business.
Centrica, which owns UK's biggest household energy supplier British Gas, said a difficult operating environment compared to the same period last year resulted in a 54 percent drop in residential energy profits to 270 million pounds.
Compared to a year ago, average residential gas use fell by 18 percent and electricity consumption was 3 percent lower.
"The favourable combination of extremely cold weather and low wholesale commodity costs experienced in 2010 was not repeated," Centrica said in a statement on Thursday.
For the six months ended June 30, Centrica reported an operating profit of 1.26 billion pounds on sales 2 percent lower at 11.5 billion pounds.
Analysts were looking for a profit of 1.29 billion pounds, on sales of 11.24 billion pounds, according to a Thomson Reuters I/B/E/S poll.
Shares in Centrica were down 2.15 percent at 314.26 pence, among the top percentage losers on Britain's blue-chip FTSE .FTSE index.
The company, however, expects earnings growth for the full-year on the back of the recent tariff increases as well as a continued good performance at its upstream business, where first-half profit rose 10 percent to 531 million pounds.
Analysts expect the company to report an operating profit of 2.50 billion pounds in 2011, 14 percent higher than 2010.
"Better results from the upstream business, where we are seeing good production and where we could benefit from higher (commodity) prices, will offset pressures on the downstream business where we've had to put prices up," Finance Director Nick Luff told reporters.
Three weeks ago, Centrica unveiled plans to raise domestic tariffs for gas by an average of 18 percent, and for electricity by an average of 16 percent, an increase which will affect nine million British energy users.
On Thursday, Centrica said it had been selling energy at a loss since April following sharp increases in wholesale prices.
"Without the August price rise, we would have made a loss in the second half, wiping out a large a part of the 270 million pound first-half (residential energy) profit," the company said.
The price increase should help shore up second-half margins, Investec analyst Angelos Anastasiou said.
Centrica became the second of Britain's big six energy suppliers to put up prices after Iberdrola's (IBE.MC) Scottish Power. Scottish & Southern Energy (SSE.L) followed soon after, and analysts expect the rest to raise tariffs as well.
(Reporting by Adveith Nair, Editing by Rosalba O'Brien and Jane Merriman)
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